No matter what size or sector a business, effective credit control is a vital process in keeping the business running.
When receivables slow down, a lack of incoming cashflow can have a detrimental effect and in extreme cases, can be the difference between survival and failure.
It is important to remember that sometimes in-house efforts to collect overdue payments is not enough; effective credit control can be a drain on resources. That is why many firms look to outsource to a professional debt collection agency when accounts are particularly tricky to recover. A debt collection agency (DCA) is likely to have more success, as successful collection for your business is their number one priority.
But how do you select a DCA to work with and represent your brand? Debt recovery firms can vary in how they work and what sectors they represent. Here we take a look at some of the key areas that you should be considering before partnering with an agency:
Debt collection can be either pre-legal or legal. Be careful of the latter without exhausting the former. Often, legal firms will send out an initial letter (known as Letter Before Claim) but this will immediately incur costs for you. It is better to go down the route of Pre-legal debt recovery with an option to escalate to legal debt recovery should collection be unsuccessful. Even then, this should be approached with caution – how likely is it that your customer can pay, even if the ruling is successful. A good option is to work with an agency that can deliver on both processes – and be able to advise if a positive outcome is likely, should legal collection be considered. Don’t throw good money after bad.
What kind of debt are you looking to collect? Look for a DCA that is experienced in collecting both individual and business debt as they both have different approaches. A good agency should be able to collect across both disciplines.
Look for an agency that works across a wide range of sectors – they will have a wider understanding of best practices and challenges, even for more niche sectors.
If you are looking to recover credit loan agreement debt from consumers, you will need to work with an agency who is Financial Conduct Authority (FCA) regulated. For business and non-FCA debt, it is prudent to work with an agency that is a member of the Credit Services Association. These accreditations are an assurance that the DCA is meeting best practice guidelines. It is also important to use an agency that has fully trained CAI trained collectors, who have a complete understanding of the legalities of debt recovery. This is an assurance that they will deliver a professional, ethical service at all times.
How long an agency has been trading is vital, as is working with an agency that has long standing client retention.
A reputable agency will protect your brand and treat your customers with respect and should be transparent in showing how they are working for you. Being able to view the status of all your accounts, latest communications, payment plans in place and have a dedicated account manager is vital.
Reconnection and trace
One of the challenges of debt recovery, can be locating debtors when they have ‘gone away’. Many agencies partner with a Tracing agency in order to validate a subject’s whereabouts before commencing collection. This can prove essential to prevent the chasing of dead accounts.
Many agencies may have a standard debt recovery cycle in place – which is a solid option. But what if you wanted a bespoke, branded approach for your customers? Look for an agency that can deliver both routes.
There is no need to get tied or agree to a minimum amount of invoices referred. There should be no account set up charges or upfront costs to pay.
It is worth considering working with a DCA that can accommodate your fluctuating business needs and offer other services, if required. This may just be additional finance services such as credit control, invoice production and despatch, sales ledger support but may also include any other business service such a customer care support or software and IT solutions.
How does Controlaccount measure up?
Controlaccount Plc is a leading debt recovery and outsourcing firm that has been partnering with leading, global brand names for over forty years. We work across a range of sectors from healthcare, commercial and manufacturing to education and logistics – and almost everything in between. Whether you operate in B2C or B2B markets, we can offer a bespoke solution to your business needs. We are founding members of the Credit Services Association and all our collectors are trained to CAI standards. Our in-house trace and legal teams can top and tail the collection service, if required.
We have developed a market leading debt recovery platform which provides a fully transparent service to our client and enables them to access all their accounts and any actions 24 hours a day, 7 days a week.
In addition to ethical and efficient debt recovery, we deliver fifty services across six solutions in order to add value to all parts of our clients’ business.
To speak to our new business team and receive an immediate, no obligation quote, please call 01527 388 388 or send our team an email.